How does the Property Transfer process work?
JOHANÉ JANSE V RENSBURG
Snr. Associate | Attorney
The transfer of ownership of a property, from the seller to the purchaser, can be a nerve-wracking process. It is our team’s mission to ease the process of purchasing a house and provide you with sound advice on how to make your home buying experience as effortless as possible.
Why do we transfer a property?
The ownership of immovable property is only obtained upon registration of a property in the purchaser’s name at the relevant Deeds Registry Office. The title deed, which is registered in the purchaser’s name, will primarily be deemed proof of ownership of the property.
The main focus of South-Africa’s land registration system is to provide information to the public regarding ownership of land and real rights in property. The primary purpose of registration of a property, is to register and protect these rights.
What are the fees payable in a transfer of a property transaction?
The purchaser is responsible for the transfer fees, namely that of the conveyancing/transferring attorney and the bond fees of the bond attorney. These fees are calculated according to a fixed tariff prescribed by the Legal Practice Council. The purchaser is also liable to pay the transfer duty, which is tax levied on the value of any property acquired by any person (including Companies, Close Corporations and Trusts). These rates are prescribed by SARS, as can be seen in the table below:
|Value of the property (R)||Rate|
|1 – 1000 000||0%|
|1 000 001 – 1 375 000||3% of the value above R1 000 000|
|1 375 001 – 1 925 000||R11 250 + 6% of the value above R 1 375 000|
|1 925 001 – 2 475 000||R44 250 + 8% of the value above R 1 925 000|
|2 475 001 – 11 000 000||R88 250 +11% of the value above R2 475 000|
|11 000 001 and above||R1 026 000 + 13% of the value exceeding R11 000 000|
The seller is responsible for payment of all the rates, taxes and levies of the property up until the date of registration of the transaction and the fees, so as to cancel an existing bond over the property.
What are the steps in the transfer of a property transaction?
1. The purchaser and the seller enter into an agreement by way of an offer to purchase the immovable property, which then forms the basis of the transaction. The seller appoints the conveyancing/transferring attorney and if the seller has no specific preference, the agent may introduce a conveyancing/transferring attorney.
2. If applicable, the purchaser will apply for finance from a financial institution to enable him/her to purchase the property. The offer to purchase would normally include this provision as a suspensive condition – which means that it is required to happen before the sale may occur.
3. In general, there will be three conveyancing attorneys as explained below in short:
- Conveyancing/Transferring attorney will attend to the transfer of the property from the seller to the purchaser.
- Bond attorney will register the bond over the property in favor of the financial institution that awarded a home loan to the purchaser. The immovable property functions as the security in this type of loan. The bond attorney primarily represents the existing bondholder and secondarily the seller.
- Cancellation attorneys will cancel the seller’s existing bond over the property.
4. The conveyancing/transferring attorney manages the entire conveyancing process and takes the initiative for the remaining steps below. The conveyancing/transferring attorney will request the amount required to settle the seller’s bond (“cancellation figures”) from the cancellation attorneys.
5. The conveyancing/transferring attorney will enquire from the bond attorneys whether or not a loan has been granted. In the event that a loan has been granted, the transferring attorney would also have to establish what loan amount is awarded to the purchaser. Should the loan granted be less than the purchase price of the property, a deposit will be due and payable by the purchaser.
6. The conveyancing/transferring attorney sends the cancellation figures to the bond attorney and then request guarantees for the payment of the purchase price, which the bond attorney then sends to the conveyancing/transferring attorney.
7. Should there be an existing bond over the property, the bond attorneys must issue two guarantees. The first is in favor of the cancellation bank for payment of the cancellation figures together with interest; the second is in favor of the conveyancing/transferring attorney for the remainder of the purchase price. In the event that there is no existing bond over the property which should be cancelled, there will only be one guarantee in favor of the conveyancing/transferring attorney for the payment of the purchase price.
8. The conveyancing/transferring attorney will send the original guarantee (in favor of the cancellation bank) to the cancellation attorney and will keep the original guarantee in favor of his firm on the office file.
9. The conveyancing/transferring attorney will request the rates, lights, water and refuse removal clearance figures from the local authority together with the levy figures from the home owner’s association or body corporate, if applicable. A transfer of a property cannot be registered in the Deeds Registry Office without such clearance certificate. It is important to note that the seller will be required to pay a few months in advance in order to obtain such a clearance certificate, but any credit at the date of transfer will be calculated on a pro rata basis as at the date of registration and the credit will be refunded to the seller.
10. The conveyancing/transferring attorney will now attend to the drafting of the required transfer papers and the parties will be required to attend at the conveyancing/transferring attorney’s office to sign such documentation.
11. The purchaser will now be obligated to pay the conveyancing/transferring attorney’s transfer costs and the transfer duty. A pro forma account will be presented to the purchaser with estimated costs and the final account will only be provided after the property has been registered.
12. The conveyancing/transferring attorney will instruct all the other attorneys to lodge their documents simultaneously at the relevant Deeds Registry Office. The documents are now processed in the Deeds Registry Office and this can take up to 15 working days, provided that the documents were not rejected and does not need to be re-lodged again.
13. Once the transaction is registered in the Deeds Registry Office, the purchaser becomes the owner of the property. All the parties will be informed on the date of registration. The conveyancing/transferring attorneys will draft a final statement of account to showcase how the funds were applied throughout the transaction. The amount required to cancel the seller’s bond is paid and the seller receives the net proceeds of the sale.
14. The Deeds Registry Office will update its records and if there is a bond registered on behalf of the purchaser over the property, the original title deed will be sent to the relevant financial institution. If there is no bond registered over the property, the original title deed will be sent to the purchaser directly.
Every transaction is unique, and so we always advise that you consult a conveyancer who will assist you with any transfer related queries you may have.
For assistance e-mail us at firstname.lastname@example.org or phone us on 012 001 2739.